Ages For Full Social Security Benefits

Your May Have To Pay Taxes On Social Security Benefits

What is the Full Retirement Age for Social Security?

Most people know that Social Security is funded by a tax on earnings, currently 6.2% for the employee . But some retirees dont realize that you may well have to pay income tax on Social Security benefits when it comes time to claim them. Benefits lost their tax-free status in 1984, and the income thresholds for triggering tax on benefits havent been increased since then.

It doesnt take a lot of income for your Social Security benefits to be taxed. Your benefits wont be taxed if your provisional income is less than $25,000 if youre single or $32,000 if youre married. If youre single and your provisional income is between $25,000 and $34,000, or married filing jointly with provisional income between $32,000 and $44,000, up to 50% of your Social Security benefits may be taxable. If your provisional income is more than $34,000 on a single return or $44,000 on a joint return, up to 85% of your benefits may be taxable.

The Social Security Administration says about 40% of beneficiaries pay taxes on their benefits. Since the thresholds arent adjusted for inflation, the number of beneficiaries who pay taxes on Social Security benefits increases every year. The Social Security Trustees annual report estimates that taxes on Social Security will total $45.1 billion in 2022, up from $34.5 billion in 2021.

You may also have to pay state income taxes on your Social Security benefits. See our list of the 12 States That Tax Social Security Benefits.

An Example Of Taxed Benefits

Lets say you receive the maximum Social Security benefit for a worker retiring at FRA in 2021: $3,148 per month. Your spouse receives half as much, or $1,574 a month. Together, you receive $4,722 a month, or $56,664 per year. Half of that, or $28,332, counts toward your combined income for determining whether you have to pay tax on part of your Social Security benefits. Lets further assume that you dont have any nontaxable interest, wages, or other income except for your traditional individual retirement accounts required minimum distribution of $10,000 for the year.

Your combined income would be $38,332half of your Social Security income, plus your IRA distributionwhich would make up to 50% of your Social Security benefits taxable because youve exceeded the $32,000 threshold. Now, you may be thinking, 50% of $56,664 is $28,332, and Im in the 12% tax bracket, so the tax on my Social Security benefits will be $3,399.84.

Fortunately, the calculation takes other factors into account, and your tax would be a mere $225. You can read all about the taxation of Social Security benefits in Internal Revenue Service Publication 915.

Why Did The Full Retirement Age Change

Full retirement age, also called “normal retirement age,” was 65 for many years. In 1983, Congress passed a law to gradually raise the age because people are living longer and are generally healthier in older age.

The law raised the full retirement age beginning with people born in 1938 or later. The retirement age gradually increases by a few months for every birth year, until it reaches 67 for people born in 1960 and later.

How To Get A New Social Security Card

If you lose your Social Security card, you dont need a replacement in most cases. Just knowing your number is enough, SSA says.

If you do need a replacement, you can apply online with a free my Social Security account or in-person. If you cant use your account to request a replacement card, you can still start the process and complete it at a local Social Security office, typically more quickly, SSA says. In that case, though, youll need to provide required documents, such as a birth certificate, drivers license and passport.

8 things to know: What you should learn about your benefits

C You Can Continue Working And Not Receive Your Retirement Benefits

Social Security Age Chart: When to Start Drawing Bene...

If you decide to continue working and not start your benefits until after full retirement age, your benefits will increase for each month you do not receive them until you reach age 70. There is no incentive to delay filing for your benefits after age 70. Continuing to work may also increase your benefits, because your current earnings could replace an earlier year of lower or no earnings, which can result in a higher benefit amount.

If you are not receiving your Social Security benefits when you turn 65, you will need to apply for Original Medicare three months before you turn 65. If you dont sign up for Medicare Part B when youre first eligible at age 65, you may have to pay a late enrollment penalty for as long as you have Medicare coverage.

However, if you or your spouse are still working and covered under an employer-provided group health plan, talk to your personnel office before signing up for Medicare Part B. Once the covered employment ends, you may be eligible for a Special Enrollment Period to sign up for Part B. If so, you wont have to pay a late enrollment penalty.

Retiring Early Will Reduce Your Benefit

You can begin receiving Social Security benefits before your full retirement age, as early as age 62. However, if you retire early, your Social Security benefit will be less than if you wait until your full retirement age to begin receiving benefits. Your retirement benefit will be reduced by 5/9ths of 1 percent for every month between your retirement date and your full retirement age, up to 36 months, then by 5/12ths of 1 percent thereafter. For example, if your full retirement age is 67, youll receive about 30 percent less if you retire at age 62 than if you wait until age 67 to retire. This reduction is permanentyou wont be eligible for a benefit increase once you reach full retirement age.

However, even though your monthly benefit will be less, you might receive the same or more total lifetime benefits as you would have had you waited until full retirement age to start collecting benefits. Thats because even though youll receive less per month, you might receive benefits over a longer period of time.

Working While Getting Social Security: What To Know

Collecting the retiree benefit while earning income gets complicated. Here are some key things to remember.

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After a long career in marketing for an engineering firm, Jim Keller retired at 63. It wasnt an abrupt halt he had the opportunity to phase out of full-time work, and took some consulting gigs.

Yet a little more than a year later, in 2017, Mr. Keller said, he felt restless. Several months of playing golf and completing projects around his house in Napa, Calif., hadnt been satisfying. So he decided to study for a real estate license and went back to work.

But that second transition came with a big concern: how Mr. Keller, now 69, would manage his earned income without horribly disrupting his Social Security benefits.

Working with Kelly Crane, a certified financial planner with the Wealth Enhancement Group, Mr. Keller learned that he could bolster his retirement savings while working and deferring withdrawals from his 401. Exploring scenarios with various incomes and expenses, Mr. Crane showed Mr. Keller how he could maintain his lifestyle and still maximize Social Security benefits.

Since he enjoys his work, Mr. Keller said, he may not re-retire until 72, the age when he will be required to take minimum withdrawals from his 401. His wife, Renee, is 65 and retired.

What Is The Full Retirement Age

Full Retirement Age: Age 6567 Depending on Date of Birth. Your full retirement age is determined by your day and year of birth, and it is the age in which you get your full amount of Social Security benefits. For every year you delay taking your benefits from full retirement age up until you turn 70, your benefit amount will increase by almost 8% …

Your Retirement Age And When You Stop Working

Social Security: Full Retirement Age Explained

Your retirement age is the age you begin receiving Social Security retirement benefits. For many people, this is not the same age youll stop working.

The age you stop working can affect the amount of your Social Security retirement benefits. We base your retirement benefit on your highest 35 years of earnings and the age you start receiving benefits.

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Working After Beginning Benefits May Temporarily Reduce Them

If you file for Social Security benefits before your full retirement age but keep working, the Social Security Administration will temporarily reduce your benefit payments. For 2022, the amount of the reduction is $1 for each $2 you earn above $19,560.

If you reach full retirement age in 2022, the reduction drops to $1 for every $3 you earn above $51,960, until the month you reach full retirement age. Thereafter, there is no reduction no matter how much you earn.

Bear in mind that these reductions are only temporary. Once you reach full retirement age, your monthly benefit will be adjusted upwards to compensate you for the original reductions.

Factors That Affect Social Security Benefits

The math seems to say that everyone should wait until age 70 to reap the best benefits, but this isnt always the case. There are times when it might make sense to start collecting earlier. If, for example, you are in poor health or if the family breadwinner is ill and can no longer work, collecting before your full retirement age could help prevent debt from mounting up.

Your marital status also plays a factor. If youre single and in poor health, you could end up using your savings to pay for medical bills between the ages of 66 and 70. In this case, you might be better off collecting Social Security benefits at a lower rate than holding out for the higher payments youd receive at age 70.

If, however, youre single, in good health and either still working or have plenty of savings, consider waiting until age 70 in order to benefit from the higher payments.

With married couples, it could be best for the spouse who earns the most money to hold off until 70, while the spouse who makes less starts collecting at 62. This approach will ensure that when one of you passes away, the surviving spouse will receive the higher benefitsgenerally the amount their spouse would have received at age 70, even if the spouse died before that age.

For more help with retirement planning, consider contacting a Certified Financial Planner. They can help you ensure youre maximizing your Social Security benefits and answer any questions you have about your other assets.

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How Much Does Social Security Increase After 67

If you are able to delay claiming your Social Security benefit until you reach age 70, you will earn a significantly higher benefit. After your Full Retirement Age of 66 , your benefit goes up by eight percent each year. Consequently, if your full retirement benefit at age 66 was $1,000 per month, and you delay claiming your benefit, it will be $1,080 per month by age 67 or an additional $960 per year. If you delay until age 70, it will be 124 percent of your expected benefit or $1,240 a month. That comes out to $2,880 more each year.

To Wait Or Not To Wait

Should You Delay Applying For Social Security Past Age 70?

Consider taking benefits earlier if . . .

You are no longer working and can’t make ends meet without your benefits.
You are in poor health and don’t expect the surviving member of the household to make it to average life expectancy.
You are the lower-earning spouse, and your higher-earning spouse can wait to file for a higher benefit.

Consider waiting to take benefits if . . .

You are still working and make enough to impact the taxability of your benefits.
Either you or your spouse are in good health and expect to exceed average life expectancy.
You are the higher-earning spouse and want to be sure your surviving spouse receives the highest possible benefit.

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The Downside Of Claiming Early: Reduced Benefits

Consider the following hypothetical example. Colleen is 62 as of 2022. If Colleen waits until age 67 to collect, she will receive approximately $2,000 a month. However, if she begins taking benefits at age 62, she’ll receive only $1,400 a month. This “early retirement” penalty is permanent and results in her receiving 30% less year after year.

However, if Colleen waits until age 70, her monthly benefits will increase another 24% over what she would receive at her FRA, to a total of $2,480 per month.1 If she were to live to age 89, her lifetime benefits would be about $112,000 more, or at least 24% greater, because she waited until age 70 to collect Social Security benefits.2

What If You Are Divorced

If you are divorced from a worker who is entitled to a Social Security retirement benefit, and your marriage lasted at least 10 years, you may have the opportunity to claim benefits on your ex-spouses recordeven if he or she remarried.

If you are divorced, you can receive spousal benefits on your ex-spouses record if you are unmarried, at least 62 years old, and the benefit youre entitled to on your ex-spouses record is more than what you could get through your own record.
If your ex-spouse dies, you may be entitled to a survivors benefit on his or her record. You can claim as early as age 60 for reduced benefits, or receive full benefits at your full retirement age. And if you remarry after age 60, theres no impact on your eligibility.

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Second Change: Voluntary Suspension Of Benefits

Before the change:

A worker at full retirement age or older applied for retirement benefits and then voluntarily suspended payment of their retirement benefits.
The workers voluntary suspension permitted a spousal benefit to be paid to their spouse while the worker was not collecting retirement benefits.
The worker would then restart their retirement benefits later, for example at age 70, with an increase for every month retirement benefits were suspended.

How did the law change?

For requests submitted on or after April 30, 2016:

You can still voluntarily suspend benefit payments at your full retirement age to earn higher benefits for delaying.
During a voluntary suspension, other benefits payable on your record, such as benefits to your spouse, are also suspended.
If you have suspended your benefits, you cannot continue receiving other benefits on another persons record.

There are some exceptions. If you are a divorced spouse, you can continue receiving a divorced spousal benefit even if your ex-spouse voluntarily suspends his or her retirement benefit.

What is the reason for this change? It makes it fair to delay payments for the workers spouse, and dependents if the worker has not retired or is in suspense. Couples can no longer simultaneously receive a benefit and get a bonus for delaying to file.

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Claiming Social Security At Age 66

What’s the Best Age to Claim Social Security 62, 66, or 70?

If you were born between 1943 and 1954, your Full Retirement Age is 66. Claiming at your Full Retirement Age will entitle you to your full benefit amount, but you can still wait to claim. If you wait further, you will garner delayed retirement benefits, which will increase your monthly benefit when you do start collecting.

At Full Retirement Age you can work without any deductions from your benefit amount. However, you may still be taxed on your benefit if you have other substantial income such as wages, self-employment, interest, or dividends. If so, the Internal Revenue Service taxes your combined income which is your adjusted gross income, plus nontaxable interest, plus half of your Social Security benefits.

If you file a federal tax return as an individual and your combined income is between $25,000 and $34,000, you will have to pay income tax on up to half your benefits. If your income is more than $34,000, up to 85 percent of your benefits might be taxable.

If you are married and file a joint return, and your income together is between $32,000 and $44,000, you may have to pay income tax on up to half your benefits. If your income exceeds $44,000 you may have to pay income tax on up to 85 percent of your benefits.

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Claiming Social Security At Age 70

Delaying past age 70 will not increase your benefit, however.

Full Retirement Age For Getting Social Security

Full retirement age is the age at which you can claim your standard Social Security benefit, or your primary insurance amount , from Social Security. Your PIA is the standard amount you can expect to receive based on your inflation-adjusted average wages earned throughout your career. Full retirement age is 66 for those born in 1954 and 67 for those born in 1960 or later — it varies depending on your birth year.

It is important to know your full retirement age, as it affects when you can claim Social Security without reducing your benefits, the amount of delayed retirement credits you can earn in order to raise your benefits, and how much you can earn from working while receiving Social Security without forfeiting any of your benefits.